What is a Checkbook IRA?
This is achieved by merging the tax benefits of an IRA and the control of a Limited Liability Company (LLC), creating an IRA-LLC to which IRA funds are transferred. As manager of the specially created Checkbook IRA/LLC, the IRA-holder has checkbook control over IRA funds.
IRAs can be opened by anyone, unlike Solo 401ks and defined benefit plans which require self-employment income. If you have funds in employer sponsored plans such as 401(k)s, SIMPLE IRAs, and SEP IRAs, you may able to get checkbook control using rollovers and transfers.
Checkbook IRA Key Features
- Broad eligibility
- Consolidate with rollovers & transfers
- Deductible contributions
- Roth contributions
- Nondeductible contributions
- Invest in alternative asset classes
- Eliminate transaction fees
- Invest quickly and opportunistically
- Simple administration
- Asset protection
- Can be implemented for all IRA types
IRA assets must be held by a qualified custodian and relatively few custodians have the infrastructure to administer the IRA-LLC investment structure.
Checkbook–Control IRAs are governed by Sections 408 and 4975 of the Tax Code – just like traditional IRAs. Using a Checkbook IRA-LLC enables opportunistic investment in assets that you choose. Rules governing contributions, distributions, transfers and roll-overs are the same as those that apply to traditional IRAs. Likewise, the ability to make regular, Roth, and nondeductible contributions are the same.
What are some of the special features of a Checkbook IRA?
Use a Checkbook IRA to invest in private lending, private equity, tax liens, real estate, precious metals & coins (gold, silver, palladium, platinum), forex, commodities, litigation finance, asset-based lending, cryptocurrency (Bitcoin, Ethereum, Litecoin, Ripple, and others) and nearly anything else. The only investments that are not allowed are collectibles and life insurance.
IRA-LLCs are particularly useful for investments that require immediate payment using cash, certified check, or money order. Such investments include tax lien and deed auctions, foreclosure auctions, real estate short-sales, and sheriff’s sales.
Protect your IRA and personal assets from liability resulting from retirement-plan real-estate investments using the simplicity and limited liability of an LLC.
Is a Checkbook IRA right for You?
A Checkbook IRA is right for you if you want to diversify your portfolio by investing tax-advantaged funds in assets that you know and understand.
If you have accumulated funds in other retirement plans that don’t allow you to invest freely, the Checkbook IRA can be your solution – rollover or transfer those funds tax-free and start investing.
Although annual contributions to IRAs are not as high as those for Solo 401ks and defined benefit plans, the proliferation of crowdfunding and peer-to-peer investing enables everyone to get into alternatives, regardless of the amount of investable funds.
How Do I Set-Up a Checkbook IRA?
Getting started with Checkbook IRA investing is straightforward:
1) ReSure will facilitate the formation of an IRA at a qualified custodian that supports alternative investments
2) Fund the new IRA with contributions, transfers, and rollovers
3) ReSure will form a specially created IRA/LLC, provide a compliant operating agreement, and assist with obtaining an EIN
4) ReSure will facilitate the formation of a compliant bank account in the name of the specially created IRA-LLC
5) Transfer funds from the self-directed IRA to the IRA/LLC bank account
6) Start investing using the control and freedom of the IRA-LLC checking account
Ready to get Checkbook Control of your own IRA-LLC?
Get in touch with the specialists at 401kCheckBook to learn if an IRA-LLC is best for you and get checkbook control today!